A record $640 million: Crypto companies are buying back their own coins

The digital asset industry is adopting a strategy known from a variety of traditional capital markets: since the beginning of the year, crypto companies and groups have spent nearly $640 million on buying back their own coins (tokens). The move comes as part of an attempt to revive prices and demonstrate stability and confidence during a prolonged market slowdown.

The current volume of buybacks, which stands at $638 million, shows a jump compared to the $545 million spent in the same period last year, and a dramatic surge compared to the mere $366,000 spent in all of 2024, according to data from the blockchain research group Allium Labs. Leading this trend are the derivatives exchange Hyperliquid and the meme coin creation platform pump.fun, whose combined expenditure accounts for nearly 90 percent of total market buybacks.

The wave of buybacks is taking place against the backdrop of a particularly challenging period for the crypto market, as some investors choose to abandon digital assets in favor of artificial intelligence stocks that are recording sharp gains.

Although prices experienced a slight recovery following a surprise intervention by the US Treasury in the bond markets that undermined confidence in the dollar, Bitcoin is still about 38 percent below its peak, while other popular coins, such as XRP and Solana, show a drop of about 60 percent.

For decades, public companies in the US and UK have regularly used billions of dollars to buy back their own shares as a way to strengthen prices and increase returns for shareholders. However, in the crypto world, token buybacks - which, unlike regular stocks, do not usually grant economic rights or voting rights - have been a rare phenomenon until now. The reason for this was partly due to Gary Gensler's tenure as chairman of the US Securities and Exchange Commission, days when many executives were wary of any move that could make crypto look like a security and expose them to regulatory proceedings.

This picture changed under the Donald Trump administration, as US regulators began to take a much friendlier stance toward the sector. The regulatory shift helped executives feel comfortable launching buyback programs. The Hyperliquid exchange, for example, led the trend by allocating 99 percent of its trading fee revenue to the buyback and burning of its HYPE token. Since its launch in December 2024, the company has bought and destroyed tokens worth $1.3 billion, which led to a 70 percent jump in the price of HYPE over the last year, contrary to the general market trend.

Another player in the trend is the DeFi (decentralized finance) platform Sky Protocol, which bought back tokens worth $26 million. Co-founder Ron Christensen noted that the platform generated more than $400 million in revenue over the past year, and that the buybacks of the SKY token were intended to ensure that token holders, who lead decision-making and voting on the blockchain, act in alignment with long-term success. Its coin price recorded a modest 5 percent increase over the last year. On the other hand, the Lido protocol announced in August an intention to carry out regular buybacks to tie the coin price to the success of the protocol, after reaching annual revenues of $40 million. However, Lido's coin has fallen by 71 percent over the past year and is trading at all-time lows.

Similar to the stock market, there is much uncertainty about the extent of the impact of buybacks on token prices. The decentralized exchange Jupiter has spent nearly $14 million on buying its tokens since the beginning of the year, but their price has fallen by 55 percent over the last year. The Chainlink platform also carried out buybacks, but the value of its token (LINK) has been cut in half. Due to the lack of effectiveness, the Helium platform even decided to stop its program in February, as co-founder Amir Halim explained: "It seems the market doesn't care about such moves, so we will stop wasting the money."